Telecoms regulator Ofcom has notified the European Commission of proposals to reduce prices for high speed leased lines that support UK businesses as well as mobile and broadband providers.

This follows Ofcom’s Business Connectivity Market Review which examined the £2 billion-a-year market for wholesale leased lines. Under new legislation the proposals are subject to comments from the European Commission.

The proposals include new price controls on BT, the major provider of wholesale leased line services, which would "significantly reduce" the price of newer products based on updated Ethernet-based services, including Carrier Ethernet offerings.

"This will help meet the growing demand for fast data services from the likes of schools, universities, mobile operators, internet providers and consumers," said the regulator, which has already steadily brought down leased line prices since the late 1990s.

Ofcom is proposing that BT’s high-bandwidth wholesale leased line services at speeds above 1 Gbps in all parts of the UK - except London and Hull - should be subject to regulation, as BT has been found to have "significant market power".

London is excluded as Ofcom says there is already adequate competition in the capital and Hull uses a different network infrastructure from the rest of the country.

For Ethernet-based products with speeds up to and including 1Gbps Ofcom is proposing to impose significant price reductions outside London, at 11 percent below inflation per year over the next three years.

Under the draft decisions, BT’s prices for leased lines based on older technology will be permitted to "rise modestly" to reflect higher costs in this declining market.

The new charge controls would commence on 1 April 2013 and remain in place for three years.